Saturday, April 7, 2012


What Credit Score do you need for a kentucky mortgage loan 

You Are More Than a Credit Score. However, you still need to understand what your score means.
Why do credit scores matter for Kentucky Mortgages?
Because they have a direct impact on your chances of qualifying when you apply for a mortgage, car loan or credit cards.  Your credit score is a numerical indication of the risk of you not repaying a loan. The lower your score, the higher that risk has been determined to be. A company called the Fair Isaac Corporation is responsible for these scores, also known as FICO scores. Credit scores are derived from reports kept by major credit agencies, including Experian, Equifax and TransUnion. These agencies track the amount of debt consumers have taken on and whether they pay their bills on time.
Credit scores range from 350-850. Consumers with scores below 600 may be charged higher loan rates, while those with scores above 700 are generally charged lower rates. Those with scores above 760 generally get the best rates.
How Lenders View Your Credit Score for a Kentucky Mortgage
There are 3 national credit programs at 3 different bureaus:
  • Fair, Isaac Model at Experian (formerly TRW)
  • BEACON at Equifax
  • EMPIRICA at Trans Union
Beacon and Empirica, both subscribe to the Fair Isaac's FICO model of scoring and then they integrate their own version of a person's FICO score.  On the other hand, when borrowers are looking for a mortgage loan, lenders pull what's called a "tri-merge."   A tri-merge merges and verifies all information detailed from all 3 unions into one report.
The main determinants of a credit grade are based on your credit and debt ratio. Beacon scores range from 400 - 844; while, FICO scores range from 350 - 880. Conversely, lenders determine the investment quality of a loan, with the equivalent of a grade, A, B, C or D. y 'A" paper represents the highest quality loan, and D paper is the highest risk loan for the investor.
For example, if your credit score is 680 or more, you fall in the 'A' paper category; however, not all lenders rate credit the same way. So the question is: how does your credit affect the interest rate a lender will charge you? The answer depends on the level of the consistency of good payment in your credit history, along with your debt ratio. If both are great, the loan is assigned "A" grade; and, qualifies for the best interest rate. If even one of the factors is not up to par, the quality of the loan is downgraded to 'A-" or 'B' paper. Consequently, the interest rate goes up as the perceived risk factor increases. There is a higher risk for a lender making a B, C or D paper loan because there is a higher risk for a defaulted loan. Therefore, the lender is compensated for the higher risk by charging the borrower a higher interest rate.
When lenders review one's credit score, an underwriter reviews it. The underwriter and credit scores are assessed and rated by the following criteria:
Lifestyle History
  • How long you've lived at your residence
  • Do you own or rent (Owning property - earns extra credit)
  • How long you've been employed at your current job
  • How much money earned and how credit has been used
Payment history
  • Public record and collection items
  • Severity, recent and frequency of delinquencies noted in trade line section
Outstanding debt
  • Credit history
  • Number of balances recently reported
  • Average balance across all trade lines
  • Relationship between total balances and total credit limits on revolving trade lines
Pursuit of new credit
  • Number of inquiries and new account openings in the last year
  • Amount of time since most recent inquiry
Types of credit in use
  • Number of trade lines reported for each type
  • Bankcard
  • Department store cards
  • Personal finance company references
  • Travel and entertainment cards
  • Installment loans
Quick Improve Your Credit Scoring Tips
  • Obtain Your Credit FICO Score 
  • Make any credit corrections with the proper documentation
  • Pay off small balances on high limit credit cards
  • Cancel certain credit cards and consolidate all the balances into a lower interest home equity loan or refinace your home loan with a cash out option.
All Current FHA, VA, KHC, USDA , Fannie Mae Programs for a mortgage in Kentucky with our company require a FICO Score of 640-We take your middle score.

Call 502-905-3708 to Apply for free 



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